Purchase market improvement could make all the difference in 2024
“Getting more people onto the first rung of the housing ladder should be a priority for all, as this undoubtedly frees others up to move further up that ladder”
Slowly but surely, the clouds do appear to be breaking up when it comes to the UK housing and mortgage markets, with the anticipation of course that a decisive shift on interest rates at some point in the next couple of months, might actually take us into a much ‘warmer’ summer.
That was certainly the picture painted by the most recent RICS residential housing market survey, with the flow of new property listings coming up for sale improving for the fourth month in a row, more surveyors predicting rising sale volumes, and many now anticipating that house prices will be rising towards the end of the year.
Clearly, that is positive news, particularly in the purchase space which was undoubtedly subdued last year. Up until now it has been left to remortgaging and product transfer (PT) business to keep things moving along for advisers, so again we should welcome any signs that demand for purchasing is on the up.
Looking closer at the purchase business, in particular first-time buyers. It won’t need me to point out the influence that greater product activity and product innovation can have for this borrower demographic, and it’s been good to see products such as Accord’s 99% LTV mortgage coming to market.
It’s far too early to say just how big an influence this will have – or indeed if other lenders will follow suit – but anything that pricks up the ears of would-be first-timers and sends them into the arms (and offices) of advisers to discuss their potential options, is good news for both them and our sector.
Getting more people onto the first rung of the housing ladder should be a priority for all, as this undoubtedly frees others up to move further up that ladder. That beginning to the chain can be the catalyst for a number of other purchases/sales to take place and clearly it gives a boost to all market stakeholders.
Our own data seems to back up the view that purchasing if not exactly ‘flavour of the month’ is rising once more, and that has an instant impact, not just in terms of procuration fee income, but clearly in terms of ancillary sale opportunity.
Our purchase application figures for the first three months of 2024 were the highest we have seen since quarter three in 2022, and hopefully show evidence of rising demand from purchasers but also an increasing willingness to sell and move.
The trend does appear to going in the right direction which would clearly be welcome for every single market stakeholder, but particularly advisers who I know would like to get greater parity in terms of their purchase/remo/PT business split.
Overall, therefore, there does seem to be enough positive trend data, coupled with lender appetite and innovation, to suggest we are going to see more purchase business throughout the rest of 2024 and into next year.
Making the most of that potential shift and being the first point of contact for borrowers either thinking about buying or selling, could make all the difference and generate plenty of additional income opportunities that might have been missing during much of last year. Keep up to date with latest news and keep on top of what our providers are offering:
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Anita White
Head of Lender Relationships
Upcoming Later Life Lending Workshop
We are so excited about the upcoming Later Life Lending Round Table Workshop, taking place on Wednesday 1st May 2024, between 10am and 3.30pm at Copt Heath Golf Club, Knowle.
Come and join us to meet your other specialist peers and to hear from all of your lifetime providers all in one room.
When? Wednesday 1st May 2024
Where? Copt Heath Golf Club, 1220 Warwick Rd, Knowle, Solihull, B93 9LN
What? The event is our first of two Lifetime Specialist Workshops in 2024. The day will be full of interactive round tables, showcasing the developments within the industry, chances to meet some of our directors and staff and exchange ideas. A networking lunch is provided and all delegates will also receive CPD points for attending.
The event will give you the opportunity to:
- Find out more about this growing marketplace and what it takes to become a specialist
- Find out what associated services you can offer your client
- Help clients unlock their retirement whilst finding out how you can earn ££££ per case
- Network with other delegates
- Keep up-to-date with industry news and developments
- Earn valuable CPD hours for your on-going professional development needs
Get to read more of the below and also don’t forget to visit the Equity Release Hub for more details on Lifetime Mortgages.
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Horizon Interest Reward offering your clients a discounted rate on a Horizon lifetime mortgage
explained by National Sales Manager, Sanjay Gadhia
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Victoria Clark
Head of Equity Release
Taking protection seriously
“There will always be clients that decide not to take out cover, there shouldn’t be advisers who don’t raise the topic”
Since the introduction of Consumer Duty on 31st July last year, there is now greater onus on advisers to ensure a positive outcome for each and every one of their clients.
For advisers in the mortgage market, this means looking beyond their borrowing needs and adopting a more holistic approach to the advice process by also asking about other financial requirements, including protection.
Even with this regulatory focus, it’s still the case that protection products such as life insurance, income protection and critical illness cover, can still be overlooked during the advice process. In fact, many consumers are unaware the products even exist, think they are too expensive or have simply never thought about how they would meet mortgage repayments if they fall ill or are unable to work.
This means it is down to advisers to raise the topic of protection with their clients and ensure the subject is taken seriously at every client meeting. Taking out a mortgage is one of the biggest financial commitments most people will ever make, so highlighting the importance of protecting the income that pays it, or the person earning that income, is crucial.
This may not necessarily mean providing the actual protection advice, but it does mean having a conversation about what protection is, why it is important and why the client might benefit from having at least some cover in place.
Once the protection needs of the client have been determined, it is important advisers ensure they have access to the best range of providers/products available in the market. Having access to an extensive panel of protection providers is imperative. The Right Mortgage & Protection Network’s panel of providers provides access to over 49 products so advisers can rest assured they are getting access to the widest range of options to meet the different needs of every client.
For advisers unfamiliar with the protection market, referring your clients to The Right Mortgage means one of our dedicated protection specialists will ensure your client gets the advice and outcome they need. You will also be paid a fee for the referral and kept in the loop about their progress, with a promise of no cross-selling.
All you need to do is have the conversation, i.e. ‘Did you know your home is at risk if you don’t keep up the payments? How will you make the payments if you are unable to work, have a critical illness, or if you die would your dependents be able to keep the family home?’ Then send the client details across and we will do the rest. You must however ensure you have a conversation about protection with every single person you see.
While there will always be clients that decide not to take out cover, there shouldn’t be advisers who don’t raise the topic. Having the conversation early and arranging the cover yourself or referring the client to a specialist, will not only ensure your client’s protection needs are adequately addressed, it will also ensure you are meeting your Consumer Duty obligations as an adviser. It is not an area to be overlooked, and with the many options and opportunities available in this space, it is now one that needn’t be.
Bearing all this in mind, see what we have gathered from our Providers showing you the latest innovation in Protection products which might help you open up the conversation about Protection with your clients:
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Amanda Wilson
Company Director
Clients making the choice: Business vs Personal
Private Medical Insurance offers a range of benefits, including access to private hospitals, reduced waiting times for treatments and a greater control over your healthcare journey. However, when it comes to choosing between a business funded PMI plan and a personal private PMI plan, there are a number of factors that could be considered.
When speaking to business owners it is worth considering the following points:
Accessibility and Convenience:
Business plans are easier to enrol in. The employer manages the administrative tasks and premium payments on behalf of employees. This process can save individuals time and effort in taking out their own individual plans and shows the employee that their employer cares about their health and well-being. When thinking of setting up a company scheme, a client can look into both group private medical insurance and health cash plans.
More Competitive Premiums:
Group PMI premiums work out to be cheaper than personal plan premiums. When reviewing the scheme on an annual basis and switching policies, dependent on the group size, some providers may provide additional discounts to win the business.
MHD underwriting terms:
On large group schemes. The insurers offer Medical History Disregarded underwriting terms. Which allows scheme members to claim on any pre-existing conditions they may have.
Family run businesses:
Husband and wife run businesses can add their children on to the policy. This allows them to have a cheaper premium and have access to other benefits that may not be necessarily available on a personal PMI plan.
If you would like to discuss this in further detail, please get in touch
Coffee Mornings:
Next Coffee Morning Session is on the Monday 20th May at 10am, where we have AXA and National Friendly presenting.
If you missed out on our April session, we have links to our recorded sessions which will earn you CPD time:
PMI Coffee Morning April Catch up.
Key Links:
Dedicated section for PMI advisers
PMI Adviser only Forum Hit ‘subscribe’ in the top right hand corner to keep up with all our latest topics.
Key Dates:
We are fortunate enough to be offered some training session run by Amanda Stevens from Aviva. They are hosting product training sessions for TRM advisers only, put the dates in your diaries and more information will come out soon:
7th May
10:00-11:00 SME Product Training
11:00-12:00 Consumer Product Training
5th June
10:00-11:00 SME Product Training
11:00-12:00 Consumer Product Training
24th July
10:00-11:00 SME Product Training
11:00-12:00 Consumer Product Training
We will also be hosting a training session with WPA on SME Product Training
Thursday 30th May
10:00 am start
Shout out corner!
Please join me in congratulating Mark Dobner who has been signed off for PMI CAS. Well done on all your hard work and enjoy your achievement!
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Bipin Sandhu
PMI Supervision & Development Manager
Why has General Insurance (GI) increased in price, and what can we do about it?
There is a lot of speculation as to why we have seen all the prices for General Insurance products increase over the last 12 months. The culmination of home insurance price increases over the 12-month period has resulted in home insurance prices now being 26% higher than this time last year1, an all-time high.
I have identified a few key areas which have had a significant effect on the whole market. Home insurers have had to address many challenges. Not least inflationary pressures, increasing claims and the impact of regulation to pricing. All of which have resulted in home insurance premiums increasing dramatically.
Financial Conduct Authority (FCA) new rules
The first being, the GI pricing rules. I am sure you all had enough of me banging on about it in the months coming up to January 2024. With the effects being very unknown at the time, it did not take a rocket scientist to work out premiums for especially those most savvy would increase, but did we know quite by how much? Probably not!
Therefore, we can take the hit, that now, there are not any customers out there that are paying hundreds of pounds more than they should be just for being loyal.
Cost of claims
The latest figures from the Association of British Insurers reveal that £782m2 was paid out in home insurance claims in the second quarter of 2023. The report cites a rise in subsidence claims following last summer’s record-breaking heatwave as being a driving force behind the 11% rise2. Alongside this, we had awful storms Spring 2023 which is heavily affecting the insurers loss ratios.
Inflation – building materials & building labour
Construction costs rose 15% in 2022, compared to 24.5% in 2021. To put this into perspective, on average construction costs normally rise around 3 – 5% per year.3 This means that the rebuild costs are increasing year on year at the same rate.
Key messages
Your role as an adviser has never been more important. You, as the experts can shape and guide the consumer on what is fair and right. Make Consumer Duty the centre-point of everything you do and make sure you are asking all the questions.
All of these factors not only mean advice is so important but annual reviews are too. Customers should be ensuring that their cover will be adequate if they need to make claims. Making sure you are talking to your customers every year ensures they don’t go away and look on comparison websites themselves. Make sure they come back to you!
Yes, the cost is rising, but so too should your knowledge on products and levels of advice. Use the Network for its Adviser Site, knowledge sharing and peer support, tune into our Coffee Mornings and CPD programmes, connect via our webinars and join us at our conferences. Let’s embrace the changes!
- Pearson Ham Group (2023) Home Insurance Price Movements – July 2023, https://www.pearsonhamgroup.com/
- Luckham, T (2023) Home insurance payouts outpace premiums in Q2 2023, https://www.postonline.co.uk/
- Build Partner (2023) Latest UK Construction Material Costs – January 2023, https://buildpartner.com/
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Amy Wilson
Head of General Insurance (PMI and GI)
